The Canada Pension Plan Investment Board (CPPIB) assures Canada Pension Plan (CPP) contributors that everyone will have a secure financial base in retirement. However, the CPP fund manager reiterated that the pension is not a retirement plan but helps the elderly to retire in place.
A pensioner receives at least 25% of average work earnings (33% for contributors in 2019 and later) but is responsible for filling the income gap. Many future retirees can generate additional funds or additional income in retirement by investing in dividend stocks.
First National Finance (TSX:FN) and Cogeco (TSX:CGO) can help boost your CPP because of their generous payouts. If you invest now, the average dividend yield of these dividend juggernauts is 5.84%. Accumulate more shares by reinvesting dividends to build a nest egg, then withdraw them in retirement to increase your CPP.
Big profit
The rapid increase in interest rates is the reason for the downturn in the housing market. Peter Routledge, the Superintendent of the Office of the Superintendent of Financial Institutions (OSFI), said that the financial regulator is preparing for the possibility that the housing market will experience continued weakness until 2023.
First National Finance originates, underwrites, and services prime residential (single-family and multi-unit) and commercial mortgages. While the $2.27 billion non-bank lender recorded lower mortgage originations in 2023, management said the business remains solidly profitable.
Its president and chief executive officer (CEO) Jason Ellis added that First National’s long-term securitization strategy creates five and 10-year income streams. Meanwhile, the company is patiently waiting for the return of a healthier, more sustainable housing market. In the first quarter (Q1) of 2023, revenue increased 23% to $432.1 million compared to Q1 2022, although net income decreased 33.4% year over year to $35.7 million.
However, Ellis said the first quarter results showed the strength and stability of the business. Every year since 2018, the income and debt under administration (MUA) has been constantly growing. First National derives most of its revenues from MUA, which will reach a record $131 billion in 2022. Net income for the same year was a record $197.7 million.
At $37.97 per share, current investors enjoy a 7.58% year-to-date gain on top of a juicy 6.32% dividend. According to management, First National paid out $1.9 billion in dividends ($31.67 per share) from 2006 to 2022.
Profit generator
Cogeco is trading at a discount ($55.87 per share and -9.83% year to date), but the 5.36% dividend yield makes up for the temporary weakness. The $872.67 million corporation provides broadband service to Canadians and Americans through Cogeco Communications. Cogeco Media is one of the leading radio broadcasters in Quebec.
The telco’s stock hasn’t missed a quarterly dividend payment since February 2009, and payouts are growing. Cogeco is small compared to Canada’s telco giants, although it is a growing competitive force in North America’s telecommunications and media sectors.
Cogeco is a profit generator, as evidenced by average net income of $140.55 million from 2019 to 2022.
CPP boosters
The high dividend yields of First National and Cogeco will boost CPP significantly. However, the latter (+441.86%) is the better choice of the latter (+69.94%) if the total return of 10 years is the basis.